Kasikorn Securities has reported that China’s top oil refiners have received instructions from the National Development and Reform Commission to immediately cease exports of diesel and gasoline. The directive, discussed in recent meetings with refinery representatives, is expected to impact regional fuel supplies significantly.
Under the new order, Chinese refining companies must halt the signing of new export contracts for refined fuels and seek to cancel previously agreed shipments. The suspension does not apply to jet fuel, bunker fuel stored in bonded facilities, or fuel exports to Hong Kong and Macau.
The move follows a sharp reduction in fuel flows from the Middle East, prompted by military actions from the United States and Israel. As global governments aim to secure local energy supplies, China’s export halt is seen as part of a broader effort to protect domestic availability.
Kasikorn Securities views this development as negative for the energy sector, noting that while refining margins may improve in the short term, China’s restrictive policy signals that the geopolitical situation, especially ongoing conflict, may persist longer than the market initially anticipated.
For investors seeking to capitalize on rising refining margins, Kasikorn recommends exposure to BCP (Bangchak Corporation PCL), citing its low dependence on Middle Eastern crude and its potential advantages from higher gas and oil prices through its upstream business. Kasikorn maintains an “Outperform” rating on BCP with a target price of 39 baht.
